There are not really and low hanging fruits. And if there were, we would've already included and activated them by default.
80 MB RSS (as opposed to virtual size which can be much more) is actually pretty good. In normal operation, it will use between 70 and 120 MB RSS per process (depending on the deployment model, rather few on passenger).
As andrea suggested, you can reduce your overall memory footprint by about one third when you use REE (Ruby Enterprise Edition, which is also free). But this saving can only achieved when you run more than one process (each requiring the above memory). REE achieves this saving by optimizing Ruby for a technique called Copy on Write, so that additional application processes take less memory.
So I'm sorry, your (hypothetical) 128 MB vServer will probably not suffice. For a small installation, you might be able to squeeze a minimal installation into 256MB, but it only starts to be anything but a complete pain in the ass at 512 MB (including database).
That's because of how Rails applications work in contrast to things like PHP. They require a running application server instance. That instance is typically able to answer one request at a time, using about the same amount of memory all the time. So your memory consumption is roughly equivalent to the number of application processes you run, independent of actual load. But if you tune your system properly, you can get quite a number of reqs/s out of one process.